Musha Ryoji (武者陵司) discusses the historic mission of the second Takaichi administration. He outlines the direction of Japan’s economic transformation and fiscal policy amid the AI era and geopolitical change.
The AI revolution is shaking the global order, while tensions between China and the United States are intensifying. The second Takaichi administration is portrayed as having the historic mission of using this period of transition to set Japan’s course, with confidence in Takaichi (高市氏) having increased in the Lower House election. The analysis points out that rising consumption tax and social insurance burdens are squeezing real incomes and that household consumption remains weak, while corporate earning power has improved as overseas earnings and financial income have contributed to higher ordinary profit margins.
The article then argues that fiscal policy distorted income distribution. It maintains that high-burden policies pursued in the name of integrated social security and tax reform led to mistaken assumptions about growth, and that tax revenues have increased substantially since Japan emerged from deflation. It argues that corporate-friendly policies, including lower effective tax rates and increases in dividends and share buybacks, have contributed to growth in household assets and widening inequality.
As policy recommendations, the article calls for a recovery in household consumption and strategic investment. On consumption tax cuts, it notes that imported goods and energy prices are the primary causes of inflation and that core indicators remain below the Bank of Japan’s target. It argues that Japan should seek to improve productivity and stimulate private investment by expanding investment in defense, research and development, infrastructure, AI and semiconductors.